The GMI rose to 1 (of 6) and the more sensitive GMI-R to 4 (of 10). There were 5 new highs and 21 new lows in my universe of 4,000 stocks on Wednesday. The QQQQ will change to a short term up-trend, if it holds on Thursday. I sold my QID and bought a little QLD. I will accumulate QLD (the ultra long QQQQ ETF) if the up-trend gets going. The key is to start with a small pilot buy and to increase my position only if the trend continues. I also set close stops in case the trend weakens. In this way I have the greatest position (and risk) only after the movement is consistent with my initial purchases. I learned this strategy from the great Jesse Livermore (see Reminiscences book by Lefevre below), who made small pilot buys and then pyramided up only if the market confirmed his judgment. I never add to a losing position. I hope to get in on a trend that will last for weeks or months, not minutes or days.
Dr Wish,
Regarding your post, when place close stops on a position–how close is ‘close’?
Do you use a percentage? Just curious.
Great web site by the way.
Have been reading for “many moons”, great “new look” on the site.
Better yet, same wonderful analysis. I’m glad you’re sharing with us.
Jan 30th is quite a reversal day, but the previous day was a huge overbought run-up. My sentiment indicators nearly went off the charts warning of a short-term pull-back. And it did happen, almost on cue. But the one day sell-off didn’t seem to push the sentiment indicators into oversold territory.
Except for some Nasdaq issues, most of NH/NL are still anemic. Did you notice that the leading stocks such as AVAV and ASEI were selling off as the market surged on the 29th? Very interesting.
Sorry meant Jan 28th market surge and Jan 29th reversal day. 🙂 I’m in Asia right now, one day ahead on my calendar.